As U.S.-China trade tensions escalate, Chinese investors are turning to gold in increasing numbers, driving demand despite record-high prices. The trend is fueled by geopolitical uncertainty, a depreciating yuan, and increased futures trading.
Despite hitting record highs, gold is experiencing a surge in demand from Chinese investors amidst escalating U.S.-China trade tensions. Geopolitical uncertainty, a key driver of gold prices, sees investors flocking to the precious metal as a safe haven. This trend is particularly pronounced in China, the world's largest gold market, where prolonged downturns in the stock market and property sector have fueled economic anxieties.
Adding to this uncertainty, the Chinese yuan has been depreciating, further incentivizing investment in gold. Increased futures trading also contributes to the upward momentum in Chinese gold prices, according to Ray Jia, the World Gold Council's research head for China. The Lunar New Year celebrations in late January and early February further propelled demand, as state media outlet the Global Times reported, sparking a significant purchase rush.This recent surge in gold demand coincides with a yearlong bull run for the metal, driven by global crises such as the conflicts in Ukraine and Gaza. Expectations of Federal Reserve rate cuts also contribute to the upward trajectory, pushing bullion prices to over $2,836 per troy ounce, a more than 38 percent increase since February 2024. President Donald Trump's decision to raise tariffs on Chinese goods by 10 percent adds another layer of complexity, as Beijing retaliates with tariffs and export controls on strategic materials. The market is closely watching for potential 'ripple effects' stemming from U.S. monetary policy, particularly the risk of inflation resulting from the latest tariff escalation. The World Gold Council emphasizes that gold jewelry purchases are influenced by multiple factors, including gold price, economic growth, marriage rates, and interest rates related to mortgage burdens and disposable incomes.A representative from the World Gold Council stated to Newsweek that should Trump implement tariffs on China, reminiscent of 2018, it could lead to increased volatility in the renminbi and local assets. This could potentially trigger a surge in demand for gold as a safe haven. Pan Helin, a member of the Ministry of Industry and Information Technology, expressed optimism, stating to the Global Times that gold jewelry buying enthusiasm reflects vibrant consumption during the holidays and consumer confidence in domestic development. Following Trump's tariff increase, Beijing has urged Washington to initiate negotiations and seek a mutually acceptable solution
GOLD CHINA INVESTMENTS US-CHINA TRADE WAR ECONOMIC GROWTH TARIFFS GLOBAL MARKETS
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